Skip to main content

tv   Book TV  CSPAN  September 28, 2013 4:00pm-5:01pm EDT

4:00 pm
when it went into and it started to go through the diffusion process and it was in the form of uranium tetrachloride and there were various compounds that were prepared elsewhere and then fed into the various plans to bring the process was going to be. and david green glass was one who made his way through oak ridge. then he was at los alamos and feeding information to the rosenbergs. >> the smithsonian magazine, one interesting article in 2009 about george kovar, who is considered one the most important atomic spies in russia's history and most of the people in this country did not
4:01 pm
do not even know about them until 2009. he was honored at an event and there is a wonderful article about him in the smithsonian magazine. if you search for george kovar, really interesting stuff. but he was in oak ridge as well. .. >> right now the atomic heritage
4:02 pm
foundation has something called manhattan -- voices of the manhattan project and they have been working on gathering oral histories for a long time and they are now starting to put them up on line. that is a tremendous project. they are just starting to put them up on line now but that's very interesting. >> thanks for your work. >> thank you very much. >> hello. you mention there were two other sites in los alamos. did any research touch on those communities? in hanford who perhaps may have had similar experiences if they were interested in it? >> that i don't think so or don't know. you have to certainly understand that most of those people in oak
4:03 pm
ridge didn't know hampered and los alamos existed until the day they found out about the bomb. some people who worked within the atomic energy commission would obviously and stayed with them would get sent to other places and i'm sure they had very interesting conversations about what life was like. i do talk a little bit about hanford and los alamos in the book but it's pretty much predominantly about oak ridge. i do know in later years there was kind of more i don't know if you would say a lions but definitely more sharing going on between the sites as the idea of preserving the history of the projects became important to people. they sort of reached out and wanted to join forces but there were a lot of people who worked in several different sites so they got moved around a lot to places like rocky flats or at the university of chicago university of chicago or colombia. there was a little movement between sites definitely.
4:04 pm
i am being given the cut. thank you very much. [applause] next juan zarate former assistant of the treasury for terence financing and financial crimes talks about the treasury department's war on terror following 9/11. this is about an hour. >> i want to say thanks to juan for giving us a chance to post
4:05 pm
this. i feel like i'm spending my entire day with juan because when the alarm went off this morning it was on npr juan zarate so my whole day is going to be devoted to listing to juan. i think it's emblematic of the book. the book is really quite good and we frequently talk about the whole of government for what that usually means is i want your budget and would you please send it to me like that's usually what it means when you hear government people talk about poll of government. but what i think we are really going to listen to today is about what real government means. when we brought to bear honestly and underutilized tool that is available to governments for their national purposes and juan is going to describe it up with
4:06 pm
us and discuss that with us today and was one of the pioneers. it is juan treasury guy or a defense guy and i would say yes, both. it has been his personal application to help build america in many ways and he did this very powerfully during his role at the treasury and we are going to explore that today. of course who better to bring this to all of us and engage all of you then rachel martin. i don't know how this lady does it. her husband works in the nfc. she is with npr with the weekend edition and has a 1-year-old at home so she comes with terrorism at home and and terrorism network. [laughter] but a remarkable journalist and personality and genuine policy leader.
4:07 pm
i am grateful that she is willing to take the time tonight to be with us. i will say juan i don't know how in the hell you convinced her to read your book. she devoted the time to it and it's going to make for very interesting evening for all of us. with your applause please welcome both rachel and juan. [applause] >> dr. hammer he was half joking but it was serious when juan said i have a favor to ask. a book i've written 300 or 400 pages on financing and i said sure. i have said this to his face privately i was presently surprised at how compelling i found this book to be. it's not an easy read but as far as the topic is concerned it's pretty darned close. >> my wife read it.
4:08 pm
>> exactly so i was honored and i'm thrilled to have been asked to moderate the conversation and it's an important one and comes also on the perfect day. this is when everything sort of change for treasury. it change for this country but in particular everything changed for this department where juan was working, the outlook for terrorist financing and really a tectonic shift in how many in our government looks at the tool chest that we amassed in order to confront al qaeda and how that threat would be false and change is what is chronicled in this book and in particular the tectonic shift that happened at the treasury department. so with that i would love to kind of start back and rewind the clock 12 years. you were at treasury at the time
4:09 pm
of the september 11 attacks. i wonder if you could start off by just giving us a sense of those early days and when it became apparent to the people sitting in that building that there -- that they were going to have a role to play and there was going to be something called financial warfare that was launched in response to these attacks. >> rachel first of all let me thank you for accepting the invitation for doing this. you are a remarkable voice even before you take your role on sunday you have been phenomenal on national security issues and admirable and i love listening to you on sunday mornings. i just want to thank doc your hamre. tom sanderson csis and others for other support. i would not even able to do this book or craft it without your help. this is like a little bit of a reading. a lot of you who are part of the community who are working on these issues before 9/11 and certainly after 9/11 and it's an
4:10 pm
honor and privilege to buy want to thank you for that. 9/11 really was a dramatic day not only for the obvious reasons and the tragedy we all experience but it was a shift in how the government thought about the use of power and it was very clear that president bush not only articulated that we were going to be at war with an enemy that had been at war with us and brought that war to our shores in new york and pennsylvania and washington but also we have to think creatively and differently about all elements of national power. i think it's significant the first real step the president took in the u.s. government took was assigning the executive order. the executive order announced on september 24, 2001 that gave the secretary of the treasury enormous powers. the powers that weren't necessarily new but they were amplified and innocence opened the door to this new age of financial warfare and what it
4:11 pm
did was to empower the secretary of the treasury and all the tools and the regulatory functions and sanctions at the time it's guns and badges of law enforcement and the policy to start focusing on the isolation of al qaeda from the financial system. both formal and informal. that really opened the door for a new way of thinking about how to use treasury's powers. at the time was very much focused on financing. i had just arrived at the treasury department three weeks before from the departmedepartme nt of justice. i was welcomed by folks like dan blazer and others who were here with us but i didn't know what treasury did to be honest. i came over to work on international money laundering and enforcement of the didn't quite understand treasury's role and i think that was emblematic of the government. i don't think many people understood what treasury could bring to bear and the directive from the white house was bring
4:12 pm
your powers to bear. figure out how to go after al qaeda's money isolated internationally and build an international coalition. deep in the standard you have a money laundering to go after terror financing and anything possible to not only stop the next attack but to deter future funding of terrorist groups. that really was the paradigm in the first part of the book the foundation for the new approach for the use of treasury and powers. >> does for your marching orders. you started operating under something called the 80/20 rule. can you describe what that is and how it shaped what you were doing at the time? >> the a mandate at the time was to be aggressive, as aggressive as possible in terms of the use of these powers so the secretary of the treasury the time instituted what was in essence a management role the 80/20 rule for the purposes of using treasury power and he said we are not going to have trellises by analysis. we are not going to do anything
4:13 pm
beyond the law. we are going to be aggressive with what we can do and that meant freezing assets aggressively which created controversy because the use of asset freezing authorities are powerful. in essence you throw a net around the network regardless of whether or not people are criminally liable to freeze assets and stopped the fund from in the future going into the wrong hands. >> they were on the 80% sure. >> under the law the secretary of the treasury under this power only as to have a reasonable basis to believe that somebody's a terrorist or falls under the categories and that executive order folks like david off howser general counsel and -- counselor the timer seminole and crafting them. that allowed the secretary of treasury not to go after the bin laden of the world but even associated with those who were financially supported.
4:14 pm
the directive was use it aggressively. the lawyers in the room you were part of that process are probably screaming right now because there is no question they went through a battery of lawyers and interagency process that was rigorous but the mandate was use it aggressively, let's touch some nerves and do what we can. we did that. i laid out some of the sensitivities with the saudi government in terms of looking at the sources of wahhabi funding and how some of the charities that had been built up over time are not only good works but also supported the afghan mujahideen was really a problem and that led ultimate to the shutdown of the larger saudi charity at the time. >> you said there were some that were found to be culpable or suspected of being culpable of some type of financial misdeeds who were proven that they were not involved in the right in the book that this was just the
4:15 pm
business at the time. >> is the price of the nature of this kind of authority. we were arresting assets not people. we were trying to stop bad money from going to nefarious groups. that meant you had to stop the money and it was in the possession of people who are not necessarily culpable or didn't have proof of intent that was okay because that's not the standard. that creates all sorts of friction. we have all sorts of debates internationally particularly with their european colleagues about what the standards are. now i think it's important to know we use it judiciously and we knew how important this power was only wanted to preserve it in overtime that 80/20 rule grew to be the 100% rule. there was a diplomatic cost of doing is wrong. there were legal consequences if we didn't get it right and so that role shifted over time but
4:16 pm
the baseline was we were going to be prevented even try to disrupt and dismantle financing. >> another pivotal event comes through the creation of the department of homeland security, which stripped treasury of some key authorities and it's interesting how you describe the effect on that department. talk a little bit about what that did to morale and your sense of what your role was supposed to be in the post-9/11 world. >> one of the reasons i wanted to tell the story was because of the history of the transition at the department of homeland security is not -- from a treasury expect -- perspective. one of the traumatic things that happened was the stripping of what was then called the treasury enforcement office. keep in mind treasure the time had 40% of federal law enforcement under his auspices.
4:17 pm
the customs service secret service through of firearms and tobacco. >> which i have to say some of who may not know this role said why in the world where the those authorities under the treasury to begin with? >> a lot of them were born out of excise taxes to go after the counterfeit rings that were bedeviling the country during the civil war. and so these were authorities that were sorted naturally treasury that looked like -- that often creates friction with the fbi and the department of justice and other agencies. but what happened when these bodies were stripped and these functions were stripped from the treasury was a fundamental question as to what is the treasury department if 98% of its budget in this realm is gone its most significant agencies
4:18 pm
like the secret service are stripped out what is the treasury and does it have people? i recount in the book there were times when i had to go and represent treasury in some of my colleagues as well in interagency meetings at the white house where literally the question would come up people raising their hands saying why is treasury here? why are they here? the remarkable thing rachel is that question is never asked any more. the question and said is where is treasury? why are they here? what do they have to bring to the table and to me that's the great success of that bureaucratic transition and frankly the magic of that period because we were so war logs very much kicked in the gut but we reconceived what treasury should be and if you look at all the national security issues treasuries at the table for each and everyone of them without linking a knife.
4:19 pm
>> we will talk about the specific evolution but did you have an answer in that moment? >> absolutely and we strategized this was a small cabal. the original title for the book by the way was gorillas in gray suits. part of the reason i love that title -- the publisher didn't but part of the reason i loved that title was we were not only engaged in a financial insurgency but we also had the insert and she bureaucratically within the u.s. government to survive. it was actually a very small -- chip on cm jeff ross were very corporate people. i was left with six people to help oversee the elements of the treasury that were left behind as the control and folks like bob. the financial crimes enforcement the criminal investigators from from the irs were still left
4:20 pm
behind but we actually strategize. we had sort of a come to jesus moment saying what are we? do we even exist and should we exist and why? the answer was internally and to others treasury had unique powers, authorities and relationships that could impact our enemies in ways that no other agency could do. the fbi can't do it and the cia can't in the department of homeland security can't. we are the only one second touch the markets and the financial system in a way that forces the isolation of rogue financial activity. the treasury can do that with our powers and authorities when we set out to do that. >> let's get to the quote from the but they ripa 21st century financial environment had its own system leveraged uniquely to the american advantage. the banks were the prime mover simple as it was this was strategic revelation was revolutionary. where was the revolution and how did that manifests?
4:21 pm
>> the revolution was in two ways. the first was recognizing this was an ecosystem that the ability to isolate rogue actors from a financial perspective was really about tending to the financial environment and harnessing the fact that financial actors held as the corn of the round their financial reputation in the u.s. and really bad in and of itself that motivation was the core element. if we could impact that we could actually impact how banks and nonbank financial institutions decided to do business with suspect that there's an north korean actors. understanding there was an ecosystem. the second revolution i think was the fact that we recognize that what mattered most was what those financial and commercial institutions decided in the boardrooms and in their compliance offices. it became more important to us
4:22 pm
how the ceos of banks around the world reacted then how foreign ministries were reacting because at the end of the day it was the financial actors -- they were the ones determining whether or not they would open accounts wire money issue leans, allow financial activity to go forward and if they weren't people were blocked from their financial system. it didn't matter what the finance minister said. in fact one of the things we came up against especially in later years was stewart levin writing much of this on line was just the grave consternation that european countries had with the fact that we were meeting with their financial institutions and the financial institutions were taking steps that were further him beyond what the governments were mandating and frankly wanted. but those banks were more concerned about their bottom line with the financial risk in reputational risk than anything else and again it was a simple proposition but what we did was
4:23 pm
we said look there's a strategy that actually impacts this and impacts of centrally so that is what we did. i think that is why we have seen these financial pressure campaigns and other work in ways that people hadn't even imagined just a few years ago. >> we are not talking about sanctions. if you are talking about something different. you are talking about isolating and convincing those ceos in the boardrooms that it's not only amoral. it's just about business to do business with these rogue countries. >> sanctions are a core part of it. we don't want to dismiss sanctions because the way the u.s. treasury has innovated sanctions in the way europeans do this is very important critically but it's part of what i call financial -- how do you impact the ecosystem in a way that actually arcana klehr checks that was the financial activities and how can you prompt that system to reject
4:24 pm
it in a way where you align your national security interest with a financial interest? so you are absolutely right. it's not just sanctions. it's the use of sanctions enforcement mechanisms regulations laws u.n. resolutions finds everything in the toolkit to actually set the ecosystem in the department. that was the trick and treasury today is just masterful. they do this very well and is one of the great tools the u.s. government brings to bear and we have to preserve in many ways. >> it's not all perfect as you write about in the book. there are several key studies most notably north korea who is a page-turner. [inaudible] but you write about the shortcomings and how treasury's goals and this kind of isolation didn't always measure up and
4:25 pm
line up with the goals of other agencies and other departments in the government. can you talk a little bit about the shortcomings and how you navigated those? >> i think there is an inherent intention with these kinds of campaigns and keep in mind that this is about not just telling banks what to do but it's about focusing on conduct. it's a called conduct based sanctions or conduct based activity that we are focused on and the point of this is it often is difficult to move the agenda from looking at the illicit activities and to mesh it for example with diplomatic diplomatic -- north korea is a great example for why this is different than classic sanctions. the sanctions pre-9/11 were trade based and commercial based sanctions driven by diplomacy or what was happening in iran. in a post-9/11 the way we
4:26 pm
applied it against north korea what we did was to focus on north korea's illicit financial activity. "the sopranos" state which steals in drug trafficking and money laundering counterfeiting 100-dollar bills is engaged in illicit activity that is bad for business so we focused very much on that element of the north korea portfolio. the problem though angela there is a divergence or juxtaposition between the interest of the diplomats. make a deal and to have chips on the table to trade and this kind of pressure which is basically about cleansing and protecting the international financial system and what you had in the north korean example was our public tea to actually isolate the north koreans in a way that they hadn't felt before. they told a senior white house negotiator in private you finally found a way of hurting us because we have isolated them from the banking system with one domestic regulatory act.
4:27 pm
the problem was it works too well and it got in the way of the six-party talks. the diplomats wanted to unwind it and that proved very difficult because what we try to do was inoculate the system from doing business with north korea and what we had to do was tell the financial system do this so it became a very tense interagency process between the treasury and the state department and also became a very difficult episode i think in our diplomacy because it gave away too early in the interactions with north korea. >> does that undercut the effectiveness of these kinds of tools specifically talking about section 311. does that make it less effective if we are susceptible to politics and geopolitical interests and national security concerns and other interests of other u.s. government agencies? >> i think so. the danger here is that you have not only put the potential
4:28 pm
overuse of these powers but you also have the potential that there is a divergencdivergenc e of interests between the treasury and the state department or even between the treasury and other parts of the government. for example the cia or the intelligence community in terms of wanting to take action and the intelligence community wanted to sit back and watch and wait but absolutely. i think there is a potential tension there and i think that's something that yet has to be involved in the iranian context because we have president rouhani talking about negotiations and the questions he will raise and already has begun to raise is how can the economy be improved and how can sanctions be lifted? the pressure on our end is how do you anointed because the baseline of the pressure we put on iran has been the suspect activity activity that the iranians are engaged in. it's not that they are engaged in a nuclear program but because
4:29 pm
their activities are potentially detrimental to the financial system and so how you unwind that becomes a very tricky venture. if the sense the banking community is that these are just political stools to be tossed around like diplomatic chips then it starts to lose its residents and its effectiveness globally. >> i want to get to questions but before we do i do want to ask you about syria and we will pick up any questions that you write about a financial warfare to a bank used by the assad regime. i wonder as you look at the situation now, where we are in this moment in syria do you look and see an obvious opportunity for some kind of financial pressure that would actually make a difference in a moment like this? >> i think it's difficult when one of the points i try to make in the book is that these powers
4:30 pm
are very successful and in a sense they have been sort of thought of as the alternative to diplomacy and military power and often seen as may be the silver bullet and it's not unfortunately. it's part of a set of tools and strategies to build leverage and so i'm not pollyanna-ish enough to think that a more effective or aggressive financial campaign would actually stop what assad is doing and the atrocities in syria. that said i to think to the obama administration's credit it has done a fair bit on syria. it has arisen to the level of the potential like iran and north korea or even al qaeda but it has garnered attention. you have seen the treasury department to creative things isolating -- about a year ago along with the cutter which was a significant move in coordination with the
4:31 pm
gulf countries trying to isolate actors and financial actors not a linkage and corruption but also tied to iranian support so that is very powerful. the financial community does not want to deal with the iranians and certainly doesn't want to deal with them but i do think there is a moment for amplification and this is probably it. we just have to have the political will to say look we are willing to take steps in terms of our diplomacy and otherwise to go after syria more aggressively on the financial front. i will give you two examples. one is the think we should launch a preemptive asset hunts for assad his regime and his cronies. if that is to say traditionally the way i describe it did in the saddam hussein asked the condor even the gadhafi freezing of assets that stuart levey led those have been sort of after-the-fact post-revolution posts fall of the regime. why don't we do that now? we have declared to regime
4:32 pm
illegitimate. we have declared them corrupt. they are engage and all sorts of atrocities to include chemical weapons use select go after their assets now. let's leverage the international system all the actors in the space that actually go and hunt and look for those kinds of assets and let's go find them and make it a concerted effort and maybe a split elements with the assad regime. the other thing is there are no doubt russian banks who are assisting with providing financing for the weapons and other things going in and perhaps a lifeline for assad. maybe we do more than send a shot across the bow. maybe we hit a russian bank that serves as a nexus and send a clear message to the russians the russian banking system the banking system are at banking system writ large into a saw that we are playing for keeps with respect to financial warfare. those are a couple of samples where we want to ratchet up the dial we probably could. >> with that i know there are a few in the audience who are perhaps even in the book who
4:33 pm
want to call him out on what he got wrong. i think we have a couple of microphones wandering around. does anyone have a question? if not we will keep going up here. yes sir and if you don't mind waiting for the microphone. and introduce yourself if you would. >> my name is frank bruen and i'm a private investor so you are effectively the tale that is wagging my dog so i would like to tell you a little bit of a the story and ask you a couple of questions. my -- i was in markets very heavily and deeply for 25 years before the crisis began. i went through those markets with the crisis and felt indirectly between the third and fourth layers effectively in many things you are talking about. most of us could not figure out was going on but we knew something was going on. usually when we reach that state in in the financial kind of do we always look at governance so we suspected you guys. now comes the question at the
4:34 pm
core of all of this is the protection of the reserve currency. if we lose that it's game over. there are a lot of counter plays going on against you now in which he did on wheat and sugar in syria which were the deals that you just talked about that is already tipped your hand. there started discussions going on between saudi and qatar due to direct trading is to be used on oil. there's a lot of significant others alternatives that we can develop. i would ask you this. what is the treasury department's natural checkmate if in fact the two began the damages over as the reserve currency because that is game over. >> you raise a great point and i talk about this in the latter part of the book. the challenges to the power and certainly the challenge to the dollar is an essential one. all the things you mentioned also the use of bartering and exchanges more and more often. so to answer your question i think it's the private sector
4:35 pm
because in order for this power to work the private sector has to be on time. the question is how he built legitimate systems was in the is on its own taking the right steps are prompting to take the right steps. if the steps we are taking and i talk about this is the tipping point essentially is actually forcing the good actors in the system to retreat from not only the use of the dollar but from providing banking services and financial services and at risk business lines or in at risk jurisdictions than our policies of exclusion from the financial system is actually had been damaged because we are losing inclusion to function. so there is a very healthy but delicate tones between inclusion and exclusion in the financial system and i think the bright lines of the treasury understand that. so it's a matter of calibrating how hard we go and use these powers but i think the natural
4:36 pm
check is the private sector itself. that is why these interactions between the private sector and the treasury are so important and frankly one of the things the treasury is the dialogue on a regular basis. by the way i'm no longer in government so that we hear is historical. >> that does raise another question. in this related and that is about the risks of over designating. can you talk about it because it is a balance. if every other day treasury is -- on the bank that is doing some nefarious business does it lose its power? >> i think potentially does. i think these powers are best used if they are not only used on issues of national security and port but also in ways that are targeted and focused. you do run the risk because these powers are so attractive --
4:37 pm
these are the powers that sit between diplomacy and war and people see that they are effective so congress administration officials and executives want to use these powers and they want to use them for everything. i will take a little bit of blame for this. what happened in the post-9/11 period was we adopted and adapted the terrorist financing foundation of this and started to apply it to other areas. ones that were critically important like counter proliferation or transnational organized crime or looking at -- so you have got to be careful how far you take it because you do run run the risk that it starts to blunt its effectiveness and as i just said it starts to dry the private sector way from even wanting to do business and potentially risky zones. again it's an ecosystem so it has to be attended to very carefully and if you don't have have -- you could run the risk of overusing authority or effectively excluding it from
4:38 pm
the market. >> and you also raise the risk of allowing a space where other rogue actors other financial institutions that are playing above board can come in and fill that space is if the sanctioned bank -- >> you have seen it in a couple of ways but in particular when i was at the white house i was worried about this. you start to see the countries that were isolated starting to band together, got a little bit like the alliance of financial rogues trying to help each other evade sanctions and create alternate ways of moving money and the trick there is do they have the facilities to do that? do they have outlets in the financial system? venezuela has done that historically now for the last few years for iran for example and so you have seen belarus as well in certain cases. so the question is how can you
4:39 pm
continue to isolate actors without creating a shadow network or an alliance that serves to circumvent. part of this is make sure the dollar still central and making making sure the new york as strong as a banking center and that we are a central place for capital investment. the fundamentals of america's economy and its strength globally is a part of why this power even works. the less powerful we are the less our economy runs the less the the dollar central the weaker we are and harder it is to implement these strategies. >> cert, if you don't mind waiting for the mic. >> thank you. thank you for your service for the book and for writing it. a question come cut can you make a comment please on the state of cooperation of governments and other major money centers
4:40 pm
london, singapore, tokyo? how are we doing it ringing them into the approach the treasury has put in place? >> olin did great work for the u.s. government in the u.s. treasury so thank you for your service all in. i think when you think about the international coalition that the treasury built what is interesting about it was coalition is along three lines. one we did with counterparts of the finance ministries in the central banks of the world actually became very important actors including in the financial intelligence space. secondly the banks themselves as we talked about in third the banking sectors. certain countries like switzerland or liechtenstein or luxembourg become more important in those kinds of alliances. it's less about nato and more about the banking sector. one of the successes of this
4:41 pm
period and it's a constant challenge is having the banking centers sorted in line with u.s. interests and policies. a lot of credit goes to treasury officials john taylor and others who were involved in this space trying to ensure that the major economies in banking centers were adopting the set of standards and enforcing them and politically were on the same page as we started to isolate the bunch. i think that is where it's gone relatively well. where you have friction of course and it's worth watching in the newspapers on the tax side and i think tax treaties and the treatment of tax transparency has always been a point of friction between banking centers and that is one that the u.s. is trying to do with quite aggressively and one that will continue to present some challenges between these traditional banking centers. >> mammon?
4:42 pm
>> a friend with human rights first. i welcome your comments on the russian banks and i wanted to draw you out on that more. specifically on the issue of how to deal with russia. last week we were in one place for the relationsrelations hip and this week we are in a little bit different place. the two points you raised that the preemptive -- all of those strands converge on fresh and russia's decision to continue to arm the rebels and i wonder if you could talk about how you would pursue that without some of the hazards of having the tube politicized are tanking a major relationship through the financial system? thank you. >> historically what the treasury has done has been to focus on conduct. this isn't a political maneuver.
4:43 pm
it's one that relates to the sanctity and protection of the financial system and so in the north korean context for for example we picked a bank that was a very bad bank. that bank the dough with asia and macau and we targeted it. we also targeted it as we knew it wouldn't necessarily upset the chinese in the first instance. the chinese were banking with the north koreans as well but when you send a clear signal for the chinese banks of markets and so i think finding the right example is important. you have seen treasure do this recently. a couple of years ago they designated the chinese bank for doing business with the iranians as well as they are rocky banks that the import here hears you can pick the right bank as both of an example for for the market and example diplomatically without destroying their relationship. i mention there is probably a russian bank or to that could
4:44 pm
serve as a sacrificial lamb in this effort and would really send clear messages to moscow but we have to be careful not to over politicized. >> the gentleman right here in the second row. >> thank you. all this exercise tact after 9/11 because of a direct security threat and what you have done in being rogue actors or players have been a source of the threat to the security of united states. is there any perception of a threat to national security out of the corrupt government that are not directly involving security threats to the united states but a threat to the security of their people and therefore the security of united the united states and are there any measures you would consider to address this issue?
4:45 pm
>> how do they affect the ecosystem? >> that's a great point. the most dangerous thing in the ecosystem are state actors that amplify and enable nonstate actors to access the financial system and so you can see that in two ways. the first is where you have states like china that service outlets for those coming under financial pressure. in the book i detail how the chinese and north koreans through their trading companies have largely abated sanctions in the last two years and develop protocols. so you have kind of states that do then you also have states involved -- has talked about the mafia states and that's a real problem where you have states that have direct ties with organized criminal groups and purposely leverage the power of these nonstate networks to access the financial system empower themselves and enrich themselves
4:46 pm
and what's so dangerous about the nation-states is is the nationstates have access to a lot of protocols and laws and facilities and one of the things the north koreans have done traditionally to use their embassies to courier money back and forth and counterfeit 100-dollar bills and that is why you see the counterfeit note in places like peru and taiwan. the nation-state is mixed with these nonstate actors to engage in profit making in elizabeth david e. and it endangers not only the ecosystem but potentially national security. >> hi downwards. in the case is that the financial sanctions on iran and north korea they have both been sound humanitarian consequences
4:47 pm
paired in iran -- [inaudible] u.n. agencies have had difficulties getting money to the country to pay the bills. is it possible for the treasury department or the u.s. government to create channels for humanitarian aid in these cases without disrupting the ecosystem with the national interest? >> it's a great question and it's certainly a challenge. the maximum use of these isolationist campaigns can do some damage. we have seen is not just in examples you give them in remittance operations, charitable contributions so that is always a balance and a challenge. sitting in front of you is a former counsel from ofac deshawn thornton who could tell you chapter and verse as to how the treasury department issues regulations and licenses to allow for those kinds of humanitarian exemptions and one of the interesting things we
4:48 pm
have seen the treasury do and this goes to a more positive agenda in the financial war for campaign is to allow licenses for categories of exports or categories of financial failings that actually allow for the kinds of goods and services to get into countries that we want. for example technology to get to opposition in places like iran. that has been done fairly recently. the license has been granted so banks and exporters know that they can export perhaps with some danger but yes there are vehicles for that and you've seen the treasury department use that strategically to affect some key policy goals. >> sir, in the back. >> thanks a lot want for an excellent book and for your service. i guess i had one question.
4:49 pm
just one question on section 311 which is widely used now and it's helpful in coordinating data accounts transactions jurisdictions and financial from the u.s. financial system but i think one of the drags is other jurisdictions do not have a section 311 system. what can be done or what is the treasury doing in that regard to make other jurisdictions implement and execute and design something like section 311? thanks. >> thank you very much and thank you for your scholarship on these issues. one of the interesting things in the present speech last night in the debate about the united states as an indispensable nation and power, it's clear that that's the role that we play when we talk about these financial campaigns. it's not to say that other countries haven't done quite a bit and is not to say that other countries don't have initiatives and strategiestrategie s but it's often left to the u.s.
4:50 pm
treasury and often left to the u.s. government to actually drive the strategies. the european union has actually been fairly aggressive in recent years on things like iran sanctions and syrian sanctions but even in their legal sanctions they are coming across difficult as with the number of the iranian banks for example the challenging listing in europe and actually winning. the number of al qaeda financiers challenging and winning in the european system so there are challenges to the system ripped large and i think at the end of the day we still are an indispensable nation and treasury is an indispensable party and driving what happens in the ecosystem and that requires clarity of policy and good strategic thinking and great execution. >> this gentleman in the back. >> hello. brandon shields with csis.
4:51 pm
thank you for spending time here. i think if you walk down the street in any city and any city and ask an american to describe what you think are our estimates of national power they might be be a shortlist and they might save military and the state department and we could bring more attention to this and hopefully get a more widely interested in d.c. and elsewhere two things. what national power can be brought better to focus to pursue national interest in two as october is coming up what you think is the best shot on the will -- world series? >> my angels are suffering this year so i'm not going to comment on the world series. it's a great point brandon and if you listen to some of the great national security professionals from the u.s. and i u.s. and i are always bemoaning the fact that we don't have enough tools in the toolkit. it's something maddon -- madeleine albright talks about. i would hope in this book that
4:52 pm
people are where we have a set of actors and actions and give us at least a complement to the types of things we are more aware of. i think more interestingly and this is a lesson in the use of this kind of power. in the 21st century in a globalized world and economy it's often the nonstate actors that have power and influence. we bemoaned the fact that the u.s. is not good at street craft since the arab spring has emerged so what have we learned and? we learn actually what we can try to do is to leverage the power and influence of the nonstate actors and networks for positive agendas. those that are aligned with u.s. interest and whether it's the human rights agenda or the integrity agenda or something else they're actors out there that actually are in line with our interest payday think the trick there in the 21st century is figuring out how you leverage the power and how do you create strategic persuasion to complement financial
4:53 pm
persuasions of people start to see that art diaspora community is an asset and a resource. the fact that we have americans helping run somali transitional government is an asset. in fact we have pakistani business people in the fata doing business as an asset. the fact that social activists can draw out 11 million people using a facebook campaign against terrorists, of batson asks -- assets of thinking differently about how we use power and frankly the power of individuals themselves is pretty important. we often get in this dichotomy of what washington does and what the rest of america thinks in 21st century is going to be more about what people power can do and what the superpower individual can do not just for nefarious purposes but on the positive side of the ledger. i hope that is one of the lessons are what we have done over the last 12 years.
4:54 pm
>> over here and then i will get you in the back certainly. >> thank you very much. tom sanderson from csis and i would like to say that i speak for everyone in the front row that it's been tremendously in wonderful working with your the past year and think you and congratulations for your buck. what you are able to accomplish in your successors as well demonstrates that you were able to influence the formal banking system. can you talk a little bit about the informal banking system and how difficult it is to impact things? >> is a great question and one of the great challenges. the tools that we have talked about are most effective when we talk about the formal financial system. i think it's a little bit of a false paradigm when you think of the informal or in the formal sector and no ties in between. one of the things i do in the book is try to explain what the network is.
4:55 pm
the quality network is an informal system moving money across borders basically a brokering system kind of like western union but trusted actors. the interesting thing about these networks tom is a keep records. the brokers want to know where they have sent money and who owes them so there are records. they are on computers. there are transfers. there are settlement brokers using banking so there are ties between the informal system and the formal system. even i was very critical for example talking about piracy and using these tools in piracy and thinking what are we going to do launch danny glaser in a parachute and attack their land rover in mogadishu? what do we do and the reality is as you have seen in her own research your fieldwork in kenya that illicit trade and finance actually ultimately if it reaches enough of a volume starts to in fact and impact of the formal system.
4:56 pm
banking centers built up around the financial networks of these pirate networks so at some point the ligaments of the financial system interacting can be impacted. that is not to say it's easy and that's not to say it can be done as effectively but it can be affected. the other thing that is a challenge and i talk about it in the book is the new technologies that are emerging that bit clients and the alternate currencies that not only about the role of the dove -- dollar but impact the ability of law enforcement to know who is behind transactions and how money launders opry. the fbi has put out a number of points about the big coin by criminal groups so we have to watch the digital currency space for these purposes as well. >> one more question from the gentleman in the back. >> i get to ask my question. rich davis. one congratulations. i'm going to put you on the spot
4:57 pm
policywise. assuming you had a policy position today and we were considering the issue of nonproliferation or proliferation particularly around nuclear and biobut recognizing you have state actors and potential nonstate actors that are interested in the pursuit of proliferation say nuclear. what opportunities are there through the instruments of treasury to be able to actually prevent proliferation and countries that might be reactive to iran for example whether it might be saudi arabia or another? one caveat to the question what do we recognize oftentimes we have nuclear power plants because they cost so so much for example and oftentimes they are able to be used for plutonium and enrichment. because they cost so much oftentimes they are syndicated and they are actually used --
4:58 pm
are there any tools that can be used in that fight? >> a great and complicated question, match. one of the huge challenges in the space and is not just in the financial space but also the trade is the problem of cyberand whether it's nukes or chemical or even bioconfig of the challenge of goods that are potentially being used for normal commercial purposes or nefarious purposes. one of the things we did rich i think was effective was we translated the paradigm on terror for financing on the issue of counter proliferation financing so now if you talk to the money laundering committed to whether compliance officers and banks or the financial action task force you look at the standards they are counterterrorist financing counter proliferation financing, it's hard to say. so you have got the tools and web standards set
4:59 pm
internationally. the trick is i think in this space politically what you decide to do because i think there are sensitivities around these programs. mixed agendas in terms of where they fall on the arena of priority and given the the situation serious the whole question of chemical weapons precursor proliferation is now going to fall at the top of the scale because people are saying "the new york times" "new york times" in a report the other day why were very worried about these before? clearly we were but things like nuclear proliferation and terrorism and other things fall to the head of the line so i don't have an answer for you but the system is set so you can use sanctions and you can use financial pressures that we have used all along to go more aggressively at the networks and frankly i think you know this is hard to say but i think that's the kind of system that would have needed to go after the ak
5:00 pm
khan network which relied on financiers and switzerland suppliers in malaysia and the ability to ship to places like libya and elsewhere. and so i think we have created enough awareness and systemic attention and now you need the political will to go after these targeted networks and that takes political guidance and strategy. >> thank you. we will ask one more question. as a moderator and giving you a chance to make closing remarks. you talk about the system and ecosystem of bad banks and rogue actors and terrorist networks. in the beginning after 9/11 there was a moral imperative. it wasn't a tough sell to get the cooperation. i wonder if you could talk a little bit about the evolution of that now 12 years on, is that corporation which really is essential to what you


info Stream Only

Uploaded by TV Archive on